Palanpur was the seat of a princely state ruled by the Lohani clan of Afghans. While the earlier history of the family is obscure, the family has apparently lived in India since at least the 16th century. a forbear of the family is reputed to have wed the foster-sister of the mughal emperor Akbar and received Palanpur and surrounding areas as dowry. However, the family comes into historical prominence during the period of instability that followed the demise of Aurangzeb in the early 18th century.
 
It was overrun soon afterwards by the Marathas; the Lohanis followed the trend of seeking recourse in the HEIC against them and finally entered the subsidiary alliance system in 1817, along with all other neighbouring states. The state encompassed an area of 1766 km² (682 mi²) and a population, in 1901, of 222,627. The town of Palanpur housed a population of only 8000 people that year. 

The state commanded a revenue of approximately Rs.50,000/- per year, and paid a tribute to the Gaekwad, the Maratha ruler of Baroda, of Rs.2,564/- per year. It was traversed by the main line of the Rajputana-Malwa railway, and contained the British cantonment of Deesa. Wheat, rice and sugar-cane were the chief products. Watered by the Sabarmati river, the state was heavily forested in its northern reached (the present-day Jessore sanctuary) but undulating and open in the south and east. The country was on the whole somewhat hilly, being at the edge of the Aravalli Range. Palanpur Agency : Palanpur also lent its name to a political agency, or collection of native states, on the border between present-day Gujarat and Rajasthan. The agency oversaw some 17 princely states and estates in the area, encompassing an area of 6393 square miles (16,558 km²) and a population, in 1901, of 467,271.